16 July 1998 GST/HST Interpretation HQC0002009 - Automobile Imported into a Participating Province

                                                                        GST/HST Rulings and Interpretations
Place Vanier, Tower C, 9th Floor
25 McArthur Avenue
Vanier, Ontario K1A 0L5
Atlantic TIS Centre
P.O. Box 638                                                                       File: 116451
1256 Barrington Street                                                       Case: HQC0002009
Halifax, Nova Scotia
B3J 2T5

I refer to your E-mail message of June 30, 1998, my response of July 6, 1998, and our subsequent telephone conversations concerning an automobile received as a gift by an individual resident in Nova Scotia from a relative in Ontario. When the automobile is registered in Nova Scotia, a question has arisen as to which tax should apply the 8% provincial component of the HST or the 15% provincial sales tax (PVT).

Subsection 220.05(1) of the Excise Tax Act (Act) provides for the self-assessment in respect of tangible personal property brought into a participating province from a non-participating province. For example, an individual bringing an automobile into a participating province from a non-participating province, where the automobile is for consumption, use or supply in the participating province, is required to self-assess the 8% provincial component of the Harmonized Sales Tax (HST).

Subsection 220.05(2) provides that the tax becomes payable at the time the automobile is registered in the participating province or on the day on or before which it is required to be registered, whichever is earlier.

Subsection 220.05(3) provides that no tax is payable under subsection 220.05(1) in respect of the automobile where: (a) the recipient of the supply of the property has paid tax under section 220.06 of the Act in respect of the property, or (b) tax under section 220.07 of the Act has been paid in respect of the property, or (c) the property is included in Part I of Schedule X to the Act.

Subsection 123(1) of the Act states that a "'sale', in respect of property, includes any transfer of the ownership of the property and a transfer of the possession of the property under an agreement to transfer ownership of the property". Therefore, a gift of property, constitutes a sale.

Under the provisions of Schedule X, Part I, section 24

"A specified motor vehicle that is brought into a participating province by a person after having been supplied to the person by way of sale in a non-participating province in circumstances in which tax was not payable under subsection 165(1) of the Act in respect of the supply" is regarded as non-taxable property for purposes of Division IV.1 of Part IX.

The relative did supply the au[t]omobile to the individual resident in XXXXX by way of "sale" in a non-participating province (Ontario). Therefore, in view of the exclusion in paragraph 220.05(3)(c), the individual resident in Nova Scotia does not have to self-assess the 8% provincial component of the HST.

The Sales Tax Act of Nova Scotia, Part IIA, section 31B states that "Every purchaser shall pay to Her Majesty in right of the Province a tax at the rate of fifteen per cent of the purchase price of motor vehicles and other designated tangible personal property where the purchase is not a taxable supply made by a registrant pursuant to Part IX of the Excise Tax Act (Canada)."

I talked to XXXXX of the Nova Scotia motor vehicles office on July 16, 1998. XXXXX advised me that for purposes of the PVT, a gift is considered to be a purchase (a transfer of ownership). Therefore, because the automobile was "purchased" by the individual resident in Nova Scotia, and as the gift of the automobile would not be regarded as a "taxable supply" (reference the definition in subsection 123(1) of the Act), the individual is required to pay the 15% PVT.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-6743.

Garry L. Ryhorchuk
Senior Rulings Officer
Border Issues Unit
General Operations and Border Issues Division
GST/HST Rulings and Interpretations Directorate

Legislative References:           Subsection 123(1), Section 220.05, Schedule X, Part I, section 24,
Sales Tax Act of Nova Scotia,
Revenue Canada Notice dated May 6, 1997 (concerning TIB B-076),
GST/HST Pamphlet entitled "Harmonized Sales Tax and the Provincial Motor Vehicles Tax"